The Australian economy: Down on its luck

A once-booming economy is struggling to adjust to lower commodity prices

Byline:&nbsp;

Z.G.

Main image:&nbsp;

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THROUGH a combination of good policy and good luck Australia has managed to avoid recession for more than two decades. Thanks to its close trade links with China, and a well-targeted fiscal stimulus, it was one of the few developed countries to avoid a recession during the financial crisis. However, figures released on&nbsp;March 4th show that GDP growth slowed to just 0.5% in the last three months of 2014. More worryingly, unemployment has trended upwards to 6.4%, the highest level in 13 years.
The slowdown is largely due to the fall in global commodity prices over the past year, as new supply finally caught up with Chinese demand. High prices for iron ore and coal had fuelled a mining-investment boom in Australia. But this peaked in late 2012; investment is now expected to fall by a further 40% over …<div class="og_rss_groups"></div>